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She’ll Be the Judge

By Lora Kolodny March 26, 2010 10:07 amMarch 26, 2010 10:07 am

Courtesy of MigralexAlex Mauskop and Madi Ferencz

If previous years at the Wharton Business Plan Competition are any indication, the feedback of Madi Ferencz — a competition judge, marketing veteran and a serial entrepreneur — will be highly coveted at this year’s event (semifinals in early April, finals April 28). One reason is that her consumer-goods expertise provides some contrast to the opinions offered by her fellow judges, most of whom are high-tech-focused venture investors and entrepreneurs.

Ms. Ferencz’s career, covering 40-some years, has included high-level positions at Colgate-Palmolive and Nestlé. In addition, she was the founding chief executive of two other companies: Chef Tell’s Pasta Pourovers, a sauce maker, and Magic Sliders, a well-known hardware brand.

At Magic Sliders, Ms. Ferencz popularized the Teflon-coated sliding discs that help people move heavy furniture without tearing their carpets or scratching their floors, by marketing them directly to consumers, not only in catalogs but on the then-new cable channel, QVC.

In 2007, yet another entrepreneur — a 53-year-old physician and headache specialist in Manhattan, Dr. Alex Mauskop — approached Ms. Ferencz for advice about commercializing a “great new product.” At first, she doubted their conversations would lead to more than just that, but she quickly concluded that Dr. Mauskop wasn’t a typical first-time entrepreneur.

Over 10 frustrating years, in his scant free time and using personal funds, he had developed and patented a new kind of headache pill. He had attracted an offer from a major pharmaceutical company to buy the rights to manufacture the pill but had concluded that it wasn’t a good-enough deal. He was considering taking the pill to market independently. Lacking business experience, especially retail and brand strategy, he hoped Ms. Ferencz would partner with him. (The two had met at a New Year’s Eve dinner, and as the children of Holocaust survivors each had done charitable work for the Anne Frank Center USA.)

After several weeks verifying Dr. Mauskop’s headache research — speaking with patent lawyers and headache-pain specialists and interviewing patients who had tried a prototype — she decided to take the reins as chief executive. Her first suggestion: change the clinical-sounding brand name he had chosen, Migralex, to Dr. Mauskop’s Migralex, something more personal and descriptive that would invite discussion about the doctor’s expertise and career running the New York Headache Center. At the same time, Ms. Ferencz was also helping one of her sons launch his first business, Anywhere Fireplace, which sells indoor-outdoor, bioethanol-burning, ventless fireplaces that are freestanding or can be hung on a wall.

Ms. Ferencz recently discussed these products, some of the strange things she’s sold through the years, and how entrepreneurs tend to mess up their own plans. A condensed version of the conversation follows.

Q.

Why did you get involved in judging the Wharton business plan competition?

A.

Some judges do this as an investor. I was asked and wanted to participate as a Wharton alumna, and as a woman. When I went to Wharton I was one of 20 women in a school with 1,200 men. At every level I was breaking the ceiling. It still amazes me that it is not quite equal out there.

Q.

What’s an example of a typical mistake made by entrepreneurs at competition?

A.

They over-simplify their financials and their schedules, assuming things will go according to plan, and not presenting alternatives for a scenario where something goes wrong. Another surprising thing I see at competition is the company that fails to understand its own product in the eyes of the market.

Q.

Can you give us an example?

A.

One start-up that I wanted to like had a plan to offer tailor-made clothing online. I’m the daughter of a dressmaker and designer. I know a lot about this. My first entrepreneurial venture was starting a dress boutique with my mom.

But no matter the convenience of doing what-have-you online, or the strength of your e-commerce site, an item of custom-made clothing almost never comes out right on the first try. It takes two fittings or three. All the things involved in the back-and-forth adjustments could kill all your profits if you don’t calculate that in. That was a fatal flaw for this company that could have been easily understood through basic market research.

Q.

What makes for a winning pitch or plan at competition?

A.

It used to be about the vision. Today, it’s about the vision and viability. Great ideas are a dime a dozen, which most entrepreneurs need to learn. I tend to vote for entrepreneurs who can prove that they can and will make their business happen, who have that passion but demonstrate realistic expectations.

Q.

What are the most unrealistic expectations you hear at competition?

A.

A lot of plans are pitched around a single product. Even though people can use this widget, or snack, or medical whatever, new companies don’t understand it is hard, from a retailer’s point of view or a dealer-distributor’s point of view, to put a single product out on the shelf. And if you get into retail, it is difficult to have it succeed in stores. Nobody wants to have a single line item on the books.

You may have to sell something yourself for a longer time to build interest, so that when it does appear in stores people will already know about the product and be willing to try it. It’s something I did with Magic Sliders to get started, and I’m doing again with Dr. Mauskop’s Migralex, and with my son’s business, Anywhere Fireplace.

Q.

What exactly is Dr. Mauskop’s Migralex?

A.

The product itself is an over-the-counter headache medicine that is desperately needed. It is based on research Alex had found and tested in the ’90s that said among those who suffer headaches, 50 percent lack free-ionized magnesium in their bodies.

Regular magnesium supplements cause digestive problems. And with a lot of headache pills, prescription and over-the-counter, the saying goes, “the side effects are worse than the cure.” If the pills have caffeine and preservatives, they can cause what are called “rebound” headaches along with stomach problems.

The idea was to have a very clean, fast dissolving tablet combining free-ionized magnesium and aspirin, to quickly relieve these terrible headaches without causing new problems. We’re very new at this point. We just launched on Dec. 10th.

Q.

How did you decide that Dr. Mauskop’s Migralex would be worth your time?

A.

Alex had more than a great idea. He had a stack of research and some interesting statistics to start with, and a passion about his work with patients. From market studies he knew that only 29 percent of 100 million headache sufferers are satisfied with their remedies. But the most convincing thing for me was feedback from his own patients who could not get relief from anything but his prototype pill, unless they were to come in for regular magnesium shots.

Q.

Your experience was mostly in marketing consumer goods, everything from hardware to detergents, but never pharmaceuticals.

A.

When I used to interview someone, and they’d say, ‘I like that category,’ I’d never hire them. When you know how to market, you know how to market! Sometimes, you have to learn more. I have had to learn about the Internet, and my sons tell me I have to do this even faster. But I have marketing in my fingertips.

Q.

Is there a secret to great marketing?

A.

Starting with a product that meets an un-met consumer need! After that, marketing a medicine is no different than dresses, decaffeinated tea or detergent. I can sell anything by just listening to consumers, figuring out what will make this appealing to them, having packaging that answers the right questions, and a Web site that does it, too.

Q.

What is the strangest product you’ve ever worked on?

A.

There were a few early in my career: One-size-fits-all wigs. Those were not terribly attractive or comfortable, which made them almost impossible to sell. But the strangest was most certainly artificial toenails. We had a license to use special art by Salvador Dali on these things. Since I was the only female around at that level at Colgate at the time, I got to be in charge of this. I tried to say, ‘I’m not sure the world is ready for artificial toenails,’ but the head of the company wanted to try it. I was told I wasn’t typical. In a way, I wasn’t. But we test marketed this product on the Riviera, and of course it did not work. A lot of times you have to listen to common sense. Even today nobody has had success with artificial toenails.

See The Prize’s guide to coming business plan competitions. And here’s how to win a competition.

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